cm43/07 proposed purchase of no. 80 railway …€¦ · proposed purchase of no. 80 railway street,...

Ordinary Meeting of Council 19 March 2007 51

Wollongong City Council

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REF: CM43/07

PROPOSED PURCHASE OF NO. 80 RAILWAY STREET, CORRIMAL Report of Manager Commercial Projects and Property (RMC) 24/01/07 05.02.04.034

PRECIS

The owner of Lot Y DP 164371, 80 Railway Street, Corrimal has requested Council purchase his property. The land is zoned 9(d) Reservation - Open Space and Council is obligated, upon request by the owner, to purchase the property. This report seeks Council’s authority to proceed with the acquisition.

RECOMMENDATION

1 Council acquire Lot Y DP 164371, 80 Railway Street, Corrimal from Mr Glyn Hughes, or his nominee, on the following conditions:

a A purchase price of $350,000 (GST exclusive) be paid for the land; b Each party be responsible for their own legal costs in the matter;

2 Upon the acquisition being finalised, Lot Y DP 164371, 80 Railway Street, Corrimal be

classified as Operational land in accordance with the Local Government Act, 1993. 3 Upon acquisition, Council enter into a lease agreement for the rental of the property on the

terms and conditions as set out in this report. 4 Upon the property being vacated, all improvements be demolished and the land be

reclassified as Community land in accordance with the Local Government Act, 1993. 5 Authority be granted to affix the Common Seal of Council to the transfer and lease

documents relating to this matter.

BACKGROUND

Lot Y DP 164371, 80 Railway Street, Corrimal is zoned 9(d) Reservation - Open Space under Wollongong Local Environmental Plan 1990. Under this zoning, Council is obligated to purchase the land, if requested to do so by the owner. In November 2006, the owner of 80 Railway Street, Mr Glyn Hughes, requested Council purchase his property. Council engaged consultant valuer, Mr Murray Allen from Walsh & Monaghan Valuers, who assessed the value of the property at $335,000 (GST exclusive). Mr Hughes rejected Council’s offer and engaged Mr Brendan Carr from Martin Morris & Jones, who assessed the value of the property at $365,000 (GST exclusive). Following negotiations, agreement was reached for the purchase of the property at $350,000 (GST exclusive), subject to Council approval. Advice has been received from Acting Manager City Strategy that $1M has been set aside in the Section 94A Plan for the 2006/2007 financial year for acquisition of properties zoned 9A, 9C and 9D. Therefore, this property is eligible for purchase using these funds. A building condition report was undertaken by the Works & Services Division who advised that there are no major structural problems with the property.

Ordinary Meeting of Council Page 152 19 March 2007


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5 The owner has expressed the wish to continue living in the property by renting it back from Council after purchase. This proposal is supported by the Recreation & Natural Resources Division who do not have any immediate plans to redevelop the nearby Corrimal Memorial Park. It should be noted that the adjoining property at 82 Railway Street is also owned by Council and is currently leased on a holding over basis. Management of the rental of 80 Railway Street will be placed in the hands of Council’s rental management agent, Martin Morris & Jones, after the property has been purchased by Council. The terms of the lease agreement will be as follows: Lessee: Mr Glyn Hughes

80 Railway Street CORRIMAL 2518

Area to be Leased: Lot Y DP 164371, 80 Railway Street, Corrimal Permitted Use: Residential premises Term: 6 months with a review at the end of the term Date of Commencement:

The day after settlement has taken place

Rental: $190.00 per week Outgoings: Lessee to be responsible for payment of Sydney Water

rates and charges, water usage, Land Tax, electricity, gas, garbage removal and all other charges whatsoever relating to the leased area, but not Council rates.

Maintenance: The lessee to be responsible for all minor maintenance

and repair of the leased premises. In order to rent the property, it is necessary that the site be classified as Operational land after purchase. Upon the property being vacated, all improvements will be demolished and the property reclassified to Community land under the Local Government Act, 1993. PROPOSAL

It is proposed that Council proceed with the acquisition of Lot Y DP 164371, 80 Railway Street, Corrimal, as shown on Attachment 1, in accordance with the terms and conditions as set out in this report. CONSULTATION AND COMMUNICATION

The proposed acquisition has been negotiated by Council’s Commercial Projects & Property Division with Mr Glyn Hughes, the owner of 80 Railway Street, Corrimal. Mr Murray Allen from Walsh & Monaghan Valuers has provided valuation advice in relation to this acquisition. Acting Manager City Strategy – agrees with purchase of property and has advised that funding for the purchase is available through the Section 94A plan. Acting Manager Recreation & Natural Resources – agrees property should be purchased and leased back to the vendor until it is vacated, at which time it should be added to the public reserve. Manager Works & Services – has undertaken a building condition report and advised that there are no major structural problems.

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PLANNING AND POLICY IMPACT

This acquisition is in accordance with Council’s policy on the purchase of properties. Upon acquisition, the site will be classified as Operational land in order to allow the property to be rented back to the vendor. Upon the property being vacated and all improvements demolished, the land will be reclassified to Community land in accordance with the Local Government Act 1993. ECOLOGICAL SUSTAINABILITY This matter is consistent and complies with the principles of Ecologically Sustainable Development (ESD) as outlined in the Protection Administration Act 1991, as amended by the Protection of the Environment Operations Act 1997. ESD is interpreted to mean development that improves the quality of life, both now and in the future, in a way which maintains the ecological processes upon which life depends. The four principles of ESD have been considered and the effect of this proposal on them is as follows: Precautionary Principle Council is undertaking action which will mitigate any environmental impact and enhance the current amenity without any scientific evidence of environmental impact. Inter-generational Equity Council, through this proposal, will enhance the quality of life for current and future generations. Ecological Integrity This proposal will not affect the ecological diversity of the existing life systems and will enhance and maintain the essential ecological processes and life systems of the local area by adhering to environmental safeguards. Pricing The ecological, social and economic costs of this proposal have been considered and adequately assessed as part of this project. RISK ASSESSMENT

A risk assessment carried out for this proposal has indicated that there is a low risk to Council if the recommendations in this report are not undertaken. FINANCIAL IMPLICATIONS

Following receipt of the request by the owner for Council to purchase the property, Walsh & Monaghan Valuers were requested to undertake a valuation to determine the current market value of the property. They advised that the current market value of the subject property is $335,000 (GST exclusive). An offer made to the vendor at this amount was rejected and a counter offer made of $365,000 (GST exclusive), based on valuation advice received by the vendor from Martin Morris & Jones. Upon review of that valuation, agreement was reached for the purchase of the property for an amount of $350,000 (GST exclusive). Funds for the purchase are available from the Section 94A Plan for the acquisition of adversely zoned properties. The vendor has requested that Council lease back the property and this rental agreement will be managed by Martin Morris & Jones. The vendor will be responsible for minor maintenance and repair of the property and Council will receive $190.00 per week in rental.

Ordinary Meeting of Council Page 154 19 March 2007


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5 OPTIONS

This heading has been considered but is not applicable. CONCLUSION

As the subject property is zoned 9(d) Reservation – Open Space, Council is obligated, upon request by the owner, to purchase the property. Therefore, it is recommended that the property be acquired on the terms and conditions as set out in this report.

Name Position Title Date Signature This report provides Councillors with all the relevant information and is correct at the time of writing.

This information has been relied upon in preparing the report and its recommendations. Signed by:

Rose Cronin Statutory Property Officer 29/1/07

Peter Coyte Manager Commercial Projects & Property 2/3/07

Stephen Payne Chief Financial Officer 7/3/07

ATTACHMENTS

1. Site plan 2. Valuation report from Walsh & Monaghan dated 1 December 2006

ATTACHMENT 1 - Site plan Page 155


ATTACHMENT 2 - Valuation report from Walsh & Monaghan dated 1 December 2006


2006/5576 MA:RP

RREEPPOORRTT AANNDD VVAALLUUAATTIIOONN

PROPERTY

RESIDENTIAL DWELLING – No. 80 Railway Street, Corrimal NSW 2518. City of Wollongong.

UNDER INSTRUCTIONS FROM

Rose Cronin Statutory Property Officer Wollongong City Council Locked Bag 8821 WOLLONGONG NSW 2500

YOUR REFERENECE

Q:RMC 1059169

File: 05.02.04.034

INSTRUCTIONS

In this matter we are requested to assess the current market value, exclusive of GST, of the property known as No. 80 Railway Street, Corrimal NSW 2518, and being described as Lot Y in Deposited Plan 164371,in order to negotiate an agreed market value, for a proposed purchase of the property.

The valuation is to reflect the market value of the freehold interest and is to be undertaken in accordance with the Australian Property Institutes definition of “market” value which is: -

ATTACHMENT 2 - Valuation report from Walsh & Monaghan dated 1 December 2006 Page 157


Market Value is “the estimated amount for which an asset should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion”.

DATE OF INSPECTION

1 December 2006

DATE OF VALUATION

1 December 2006

SITE TITLE

The title search for the subject property indicates that it is described as being Lot Y in Deposited Plan 164371, situated at Corrimal, in the Local Government area of Wollongong, Parish of Woonona and County of Camden.

The first schedule of title search indicates that the subject property is registered in the name of Glyn Ivor Hughes.

LOCATION

The subject property is situated on the northern side of Railway Street, approximately 150 metres east of Corrimal Court Shopping Centre, 50 metres west of the Northern Distributor, 500 metres west of Corrimal Railway Station and approximately 7 kilometres north of Wollongong’s main central business district.

Wollongong is a large regional centre on the South Coast of New South Wales, having a population including the adjoining Shellharbour City of approximately 285,000 persons.

LOCALITY

Surrounding development comprises single storey clad cottages (some used for commercial purposes), across the road to the south of the subject property, with the Northern Distributor directly to the east of the subject, and ground floor retail shops and Corrimal’s Shopping Centre to the west of the subject.

TOWN PLANNING

Subject to the information contained within a Section 149 Certificate of the Environmental Planning and Assessment Act, Wollongong City Council records indicate the subject property is zoned 9(d) Open Space under Wollongong Local Environmental Plan 1990, which was gazetted on 28 December 1990.



The objectives of this zone are:

(a) to ensure that land required for future essential services, road, open space and community purposes is clearly designated;

(b) to provide for the acquisition of land within the zone; (c) to permits development of land within the zone where it is not

immediately required; and (d) to allow continued use of land within the zone until it is

required. However, for the purposes of this assessment, I have ignored the restrictive zoning of 9(d) Open Space, and have assumed that, but for the proposed open space, the whole of the land would have been zoned ”Residential 2(b) Medium Density” The objectives of this zone are: (a) to cater for a wide range of housing types, essentially domestic

in scale and character; (b) to allow for a range of residential densities and for urban

consolidation in appropriate locations; and (c) to allow some diversity of activities and densities provided –

(i) scale and height are comparable to those of the locality; (ii) there is little increase in traffic generation; and (iii) there will be no significant detraction from the character

of the locality or the amenity of any existing or proposed development nearby.

DIMENSIONS AND AREA

The subject property has a southern street frontage to Railway Street of 15.24 metres, with a rear northern boundary of 15.24 metres and eastern and western side boundaries of 38.767 and 38.659 metres respectively.

The total area of the site, as per the Registered Deposited Plan is 588.1 square metres.

LAND DESCRIPTION

The subject land can be described as a standard rectangular shaped allotment generally falling steeply from the road to the building before levelling out into good building land.

Property backs onto an open creek as well as Corrimal Memorial Park.

Property has easy vehicular access.



ENCUMBRANCES

The second schedule of the title search does not indicate the existence of any adverse encumbrances or restrictions which would detrimentally affect the value of the property and my report has been made on that understanding.

ENVIRONMENTAL ISSUES

The close proximity to the creek at the rear, or northern side of the subject property, may give rise to some inundation to the subject property however this should be verified by a Section 149 Certificate and/or Geotech Report as council will not give verbal advice.

An adjoining property to the east of the subject was previously purchased and demolished due to flooding issues.

Subject to the information contained within a Section 149 Certificate of the Environmental Planning and Assessment Act we do not believe the property to be situated in an area with a history of landslip or mine subsidence and at the date of inspection, there was no obvious evidence of any site contamination as the property was being used solely for residential purposes. Although we have no reason to suggest the land is contaminated, this should be verified by an Environmental Audit Report and if an Environmental Audit Report does suggest the land is contaminated, the valuation should be immediately returned to the Valuer for reassessment.

IMPROVEMENTS

The improvements on the site can be described as follows:

Construction

The main building constructed on the site comprises a part one and part two storey log cabin weatherboard and terracotta tile roofed cottage with brick basement area.

The building features concrete footings to basement area, timber tongue and groove floor boards to ground floor level with plasterboard internal wall and ceiling linings, and timber framed, double hung and fixed pane windows.

The building appears to have been constructed in 1961.



Accommodation

The accommodation of the dwelling comprises three bedrooms, one bathroom, living room, dining room, kitchen, laundry and separate WC to the ground floor level.

The basement level of the building comprises a self contained granny flat, comprising one bedroom, kitchen, living room and bathroom.

Other accommodation to basement level includes a single lock up garage under the main living area.

There are concrete balconies to both the front and rear of the dwelling.

Prime Cost Items

Prime cost items include a ‘Rheem’ 400 litre hot water service, double stainless steel laundry tub, two low down suites, shower recess, bath, ‘Electrolux’ split system wall air conditioning unit, stainless steel kitchen sink, ‘Westinghouse’ four hot plate stove.

Prime cost items to the granny flat include ‘Chef’ four hot plate stove and stainless steel kitchen sink, as well as shower, low down suite and bath.

Soft Furnishings

Soft furnishings include wall to wall carpet, curtains, venetian blinds and light fittings.

Age and Condition

As previously mentioned, the dwelling appears to have been constructed in 1961 and is generally in average condition, commensurate with its age, with no obvious repairs or maintenance being required other than those of a cosmetic nature.

The basement level bathroom, however, has a very low roof line and it is highly likely that the bathroom has not been council approved. We have taken this into account in our assessment of the property.

Secondary Improvements

Other improvements on the site comprise a concrete driveway and paths, brick retaining walls, detached ripple iron store shed with attached pet cages with ripple iron boundary fencing to northern, eastern and western boundaries and two foot brick fence to southern street frontage.

Property has minimal landscaping.



Building Areas

The areas of the improvements, as per our external measurements are as follows:

Living Area 155.5 square metres

Patios 21.2 square metres

Garage 23.6 square metres

Store Shed 11.3 square metres

REMARKS

In this matter we are instructed to determine the current market value, exclusive of GST, of the property known as No. 80 Railway Street, Corrimal NSW 2518, described as being Lot Y in Deposited Plan 164371, in order to negotiate a market value for a proposed purchase of the property.

We understand that the owner of the property has approached Wollongong City council to purchase the property due to hardship.

Under Division 3,clause 26 of the “Land Acquisition (Just Terms Compensation) Act 1991,it states that “The special value of land,any loss attributable to severance or disturbance and solatium need not be taken into account in connection with an acquisition of land under this Division...”

Division 3 applies specifically to “Owner-initiated acquisition in cases of hardship”

Therefore,the value assessed in this instance will be a current market value only and will not take into account the heads of compensation as set out in the Act.

We have assumed for the purposes of this valuation, that the property would have been zoned “Residential 2(b) Medium Density”, which is the nearest similar zoning across the road to the south of the subject.

Normally this zoning permits medium density residential developments such as villa, townhouse or home units however the minimum street frontage required for any multi-unit development is 18 metres.

The subject property has a frontage of only 15.24 metres and as such, is not suitable for medium density development and as such, has been valued as a single cottage only.



In assessing the current market value of the subject property, we have searched Wollongong City Council and EAC Property Records for sales of similar type cottages within close proximity to the subject property, and a schedule of those sales which assisted, is annexed to this report. Our valuation has been made by direct a comparison with these properties.

Generally the market for similar type residential properties in the Corrimal area has softened over the last six months however, the property is considered to be in the price range of first home buyers and as such, is slightly less affected than more expensive homes in the area.

We note the property was previously purchased for the sum of $325,000 on 10 June 2005.

Some minor improvements internally have been made to the dwelling since the sale, including provision of air conditioning.

Our calculations in this matter are as follows:

Land $220,000

Improvements $115,000

TOTAL $335,000



VVAALLUUAATTIIOONN

I determine the current market value, exclusive of GST, of the property known as No. 80 Railway Street, Corrimal NSW 2518, and being described as Lot Y in Deposited Plan 164371, in order to negotiate an agreed market value for a proposed purchase of the property , to be the sum of THREE HUNDRED AND THIRTY FIVE THOUSAND DOLLARS ($335,000).

The valuation is for the use only of the party to whom it is addressed, the intending mortgagee and the mortgage insurer and for no other purpose other than the purpose specified. No responsibility is accepted to any third party who may use or rely on the whole or any part of the content of this valuation. This report is a valuation report only and is not a structural survey. This valuation is prepared on the assumption that the lender as referred to in the valuation report (and no other) may rely on the valuation for mortgage finance purposes and the lender has complied with its own lending guidelines as well as prudent finance industry lending practices and has considered all prudent aspects of credit risk for any potential borrower including the borrowers ability to service and repay any mortgage loan. Further, the valuation is prepared on the assumption that the lender is providing mortgage financing at a conservative and prudent loan to value ratio. The “Prudent Lender Clause” above does not apply if the person or entity making a mortgage advance is an authorized deposit taking institution within the meaning of the Banking Act 1959. This valuation is current as at the date of valuation only. The value assessed herein may change significantly and unexpectedly over a relatively short period (including as a result of general market movements or factors specific to the particular property). We do not accept liability for losses arising from such subsequent changes in value. Without limiting the generality of the above comment, we do not assume any responsibility or accept any liability where this valuation is relied upon after the expiration of 3 months from the date of the valuation, or such earlier date if you become aware of any factors that have any affect on the valuation.



SSAALLEESS SSCCHHEEDDUULLEE

1. 90 Pioneer Road, Corrimal – Sold for $315,000 – Exchanged 13 November 2006

An approximately 40 year old, single storey clad and tile roofed cottage with two bedrooms, one bathroom and detached garage, on a 556 square metre allotment. Overall, property is situated on a similarly busy road to the subject however has inferior accommodation and is considered inferior. 2. 58 Wilga Street, Corrimal – Sold for $339,000 – Exchanged 26 October 2006 Property comprised an approximately 60-70 year old, 3 bedroom hardiplank and corrugated iron roofed dwelling on a 700 square metre allotment. Property is a larger block than subject in a much quieter street, although being somewhat smaller. Overall is considered of similar value to subject. 3. 17 Robert Street, Corrimal – Sold for $320,0000 @ 7 November 2006 Property comprised a 40 year old, fibro and iron roofed cottage with no garage or carport. Property however, was renovated internally but was dwarfed by two storey units on its southern side and a two storey dwelling on its northern side. Overall, property is slightly more modern than subject but overall, an inferior home and considered inferior. 4. 29 Robson Road, Corrimal – Sold for $328,500 @ 13 September 2006 Property comprised an older style miners cottage with two bedrooms and single garage on a 524 square metre allotment. Property considered to be in a superior location to subject however smaller home and considered slightly inferior to subject.



AANNNNEEXXUURREESS

Photographs

Photo 1 – View of the subject property looking north from Railway Street

Photo 2 – View of the rear of the subject dwelling looking south

6 ATTACHMENT 2 - Valuation report from Walsh & Monaghan dated 1 December 2006


Photo 3 – Internal view of the basement bathroom which does not appear to be Council approved

cm43/07 proposed purchase of no. 80 railway …€¦ · proposed purchase of no. 80 railway street,...

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